A bandwidth allocation system configured for in-service upgrading of bandwidth allocation functionality comprises dynamic bandwidth allocation software, a first processor, a second processor, first memory and second memory. The bandwidth allocation software includes an image representing firmware configured for determining bandwidth allocation requirements. A first processor interprets the firmware for facilitating determination of bandwidth allocation settings for a plurality of optical network termination units of a PON system. The second processor interprets the software for managing information upon which the bandwidth allocation settings are dependent.